What is Fire Insurance and Why is it Important?

For most homeowners, their real estate property is their most prized and cherished possession. But its value can quickly vanish if it gets burned to the ground.

Fire is one of the greatest enemies of real estate assets. Knowing the danger it poses to property and people’s lives, it’s important to get fire insurance.

But what is fire insurance exactly? Know the basics and more in this guide.

What is Fire Insurance and How Does It Work?

Fire insurance is a type of property insurance that covers losses due to fire.

Is fire insurance included in home insurance? Usually, fire is already covered by property insurance, but you can purchase a separate fire insurance policy if you want more protection.

Is fire insurance required? That will depend on the property you own.

For residential properties, it’s mandatory if the house is financed through a housing loan or used as collateral. If you own a commercial building, you also need a fire insurance policy—it’s a requirement for getting a Fire Safety Inspection Certificate^[1] issued by the Bureau of Fire Protection.

Why is Fire Insurance Important?

Just like other types of insurance, fire insurance is a form of protection. In case of fire, it protects you financially by covering losses and costs, such as repairs and construction.

With this insurance, you’re not starting from scratch after a fire since you have money to rebuild your property. You won’t need to deplete your savings when covering expenses related to repairs, reconstruction, and compensation of the affected.

Depending on your policy, the insurance may also cover temporary accommodation while the property is being fixed, plus medical costs in case someone sustains injuries while inside the burning property.

Ultimately, a fire insurance policy gives you peace of mind.

What are the Types of Fire Insurance?

Residential fire insurance – As the name suggests, this is fire insurance for homes and other dwelling spaces. These include townhouses, apartments, and condominiums, among others.
Commercial fire insurance – This fire insurance for businesses covers buildings used for enterprise-related operations. These include shops, malls, and factories, among others.

What Does Fire Insurance Cover?

Your fire insurance policy covers accidental fires resulting from faulty electrical connections, lightning, and gas explosions.

Depending on your inclusions, the following may be covered by the insurance:

The structure itself
Furniture
Appliances
Machines and equipment
Stocks

If you want to expand your coverage, you may add the following to your policy:

Typhoon
Flood
Earthquake
Riots and strikes
Robbery
Vehicle impact
Falling aircraft
Smoke damage

What is Not Covered in Fire Insurance?

While fire insurance policies have a broad scope, they also have limitations. Below are the usual circumstances not covered by this protection:

Wars
Negligence
Arson or deliberate burning of the property^[2]

Who Needs Fire Insurance?

Do I need fire insurance? If you’re one of the following, you may need to get this kind of policy.

Homeowners and would-be homeowners – If you own a home and want to protect it, fire insurance is a must-have. The same goes for those planning to buy a home via loan since this insurance is a requirement.
Landlords and real estate investors – Those who own multiple rental units, whether residential or commercial, should get fire insurance to protect their sources of income.
Commercial structure owners – Got a factory, mall, warehouse, or the like? Keep in mind that fire insurance is a requirement for getting a Fire Safety Inspection Certificate.
Tenants – If you’re renting an apartment, consider getting property insurance with fire coverage that will protect the contents of your space. The building’s fire insurance may not cover the belongings of the tenants.

How Much Does Fire Insurance Usually Cost?

How much is fire insurance? That will depend on the property you own and the coverage you want. The more inclusions you want, the more expensive the policy gets.

For basic coverage of ₱1 million, you may need to shell out somewhere between ₱1,000 and ₱3,000 per year. Nevertheless, it’s also possible to find more affordable plans if you want fewer inclusions.

Where to Get Fire Insurance?

Now that you have the answer to “What is fire insurance?”, you may want to look into your options. Check out some of the top providers of fire insurance policies in the country:

🛡️ Stronghold Fire Insurance

Stronghold Fire Insurance covers personal or business losses due to fire. It includes typhoons, floods, and earthquakes. Depending on your need and budget, you may choose to get extended coverage for more comprehensive protection.

🛡️ SGI Philippines Fire Insurance

This fire insurance from SGI Philippines covers residential fires, commercial fires, and industrial all-risk plans. Extensions, such as Acts of God and Allied Perils, are also available. What makes it a standout policy is its provisional housing feature.

🛡️ Mercantile Fire Insurance

Looking for a fire insurance policy with extensive allied risk coverage? The Mercantile Fire Insurance covers malicious damage, explosions, riot, theft, and even loss of rent. Allied perils, on the other hand, include earthquakes and windstorms.

🛡️ Pioneer Residential Fire Insurance

Pioneer’s residential insurance is a full coverage policy for residential properties, including their contents. Other natural calamities, such as earthquakes, typhoons, and floods, are also covered.

🛡️ GSIS Home Shield Fire Insurance

GSIS also offers fire insurance called GSIS Home Shield Fire Insurance. It covers fire damage in residential properties, but you have the option to get additional coverage for typhoons, earthquakes, and floods.^[3]

The following are qualified to avail of the insurance:

Active GSIS members (Ginhawa Active)
GSIS retirees/pensioners (Ginhawa Grand)
Parents of active GSIS members (GSIS Plus)
Spouse, kids, and siblings of active GSIS members and GSIS retirees / pensioners (Ginhawa Plus)

🛡️ Chubb Business Fire Insurance

If you own a commercial property, check out this comprehensive fire insurance policy from Chubb Insurance. It covers the following properties across different industries:

Marine structures, such as ports, marinas, and shipbuilding facilities
Sports and events arenas/stadiums
Airport
Hotels and motels
Manufacturing facilities

Final Thoughts

What is fire insurance? Simply put, it’s a kind of protection every homeowner and business owner needs—it’s a necessity. If you have one, it’ll keep you from losing too much money in case of fire.

If you want to know your fire insurance options, compare the country’s top insurers via Moneymax. Click the banner below to get started.

Sources:

^[1] BFP Fire Safety Inspection Certificate
^[2] Arson Legal Definition
^[3] GSIS Home Shield Fire Insurance

Protect Your Home: What is Fire Insurance and Do You Need It?